Make room for ride-sharing [Editorial]

Apr 25, 2014 | 2:37 PM

The proposal to classify Uber as a common carrier — as ordered yesterday by the state's chief public utility law judge but potentially up for consideration by the Maryland Public Service Commission in the next 30 days — is probably not the last word in Baltimore's ride wars. It simply reflects similar battles that have been raging elsewhere between traditional taxi services, utility regulators and technology-based companies like Uber that are providing an increasingly popular service.

It's easy to see both sides on this one. On the one hand, ride-sharing is an innovative approach that has gotten rave reviews here and elsewhere. One can simply use a smartphone app to summon and pay for a ride (your choice of vehicles) as well as monitor its progress and rate the driver. Uber doesn't own the vehicles it dispatches as "UberBLACK" or "UberSUV" or employ the drivers; it's a software company that operates more like a matchmaker and cashier.

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On the other hand, the regulation of common carriers from sedan and limousine operators to taxi companies protects the public from bad or uninsured drivers, makes sure vehicles are safe and licensed and ensures affordability and that all neighborhoods are served. Why would the method of dispatch — a smartphone merely substituting for a telephone call or outstretched hand — somehow exempt it from those same consumer protections?

What's needed is a compromise, one that doesn't lead to the stifling of innovation but also protects the public interest. Merely classifying Uber (or the similar Lyft service, which is likely to get the same treatment by the PSC shortly) as a common carrier or "passenger-for-hire" probably doesn't achieve that end — unless it leads to fundamentally rethinking the regulations for all common carriers to determine which are essential and which serve only to reduce competition.

Let's face it. It's not difficult to find people who are unhappy with existing taxi services. That's not just in Baltimore. Across the country, these services have often become monopolized with the unfortunate result of mediocrity and indifference to customers. Government has played a big role in that with a dizzying array of regulations that cover everything from driver language fluency to a cab's hours of operation.

But that doesn't mean anything should go on the roads either. The public expects a certain level of protection — vehicles that are safe and sufficiently insured, drivers who are competent and fares that are reasonable and easy to understand. Nobody cries when the PSC cracks down on illegal hacks operating broken down jalopies in poor neighborhoods — although they are often just as loved by their customers.

The General Assembly recently had a chance to give the PSC greater flexibility to regulate companies like Uber and Lyft under a proposed new category of "operators of transportation networks," but the legislation never made it past the committee level. Sen. Bill Ferguson, sponsor of the Senate version of the bill, said it was difficult to convince lawmakers outside Baltimore who are unfamiliar with the service to support it in the face of fierce opposition from traditional taxi operators.

Modeled after a California plan, the approach favored by Senator Ferguson and Del. Ben Barnes, who sponsored the House version, would have the PSC focus its regulation on the commercial drivers who own and operate vehicles and not so much on software companies. He fears that the PSC may yet cause Uber to leave the state and solidify Maryland's reputation as a place where government red tape discourages new ideas and approaches.

Whether this flexibility can be achieved by the PSC alone seems doubtful. Judge Terry Romine classified Uber as a common carrier largely because it didn't fit any other existing category under state law. Rewriting the statute is a task for the legislature in Annapolis, not for an independent regulatory agency.

Here's an example of where existing law is inadequate. Under ride-sharing, the cost of a trip can differ based on demand. At busy hours, a ride to the airport may be more expensive. Yet common carriers are required to post their rates in advance, and there's no mechanism to be flexible. What's to protect ride-share customers from getting ripped off by a sudden rate increase? The software provides them with the estimate of a trip's cost in advance.

Taxi companies claim to welcome competition, but apparently only from other taxi companies. There should be room for a fundamentally different approach like Uber. Perhaps the judge's ruling will be the first step toward a sensible compromise that neither disadvantages existing operators nor discourages new ideas, but at least at the moment, it looks like a tough road ahead.